“If I ran a business school there would be only 2 courses. How to value a business and how to think about markets. No modern portfolio theory, no beta, etc. You don’t have to be right on 4,000 or 400 businesses - not even 40. Circle of competence. Start with a small circle and slowly expand. Don’t spend time on companies that don’t lend themselves to valuation. Accounting is useful, but sometimes it is not meaningful. Durability of competitive advantage is the key. And market fluctuations. The market is there to serve you - not instruct you.”

The following quote led me to think about my current education and how almost everything that is taught is a waste of time and ironically what is neglected is worth the most time examining. Luckily you can also receive a Masters degree from the Buffett-Munger Business School.

What is the curriculum of the BMBS?

Well if I was responsible for teaching the classes I would recommend a serious student of business or investing study the following:

The classes would mainly be cognitive psychology, decision-making and behavior studies. The classes would be focused on writings from Kahneman and Tversky, Pavlov’s association experiment, heuristics, biases, persuasion, and other behavioral finance based experiments. Some of the required material would be:

I would add a desire for continuous learning about heuristics, the subconscious, cognitive biases, behavioral economics and anything related to Kahneman and Tversky for the remainder of your studies.

A bulk of the time would be spent examining sentiment, individual investor behavior and the more important component, institutional herding. How professionals act out of line with your interests due to incentives and job security.

We would focus on absolute targets not relative ones, aiming for a simple 15-20%.

The bulk of the time would be focused on reverse engineering famous investments of the Guru Investors like the shorts in Allied Capital, Enron, or Lehman Brothers and the longs in General Growth Properties, Washington Post, American Express, Coca-Cola, and other large concentration holdings from the past. We would talk about investment “style” and the paradoxes of value investing between various strategies (although all have similar components).

We would also examine case studies from the innovators dilemma and competition demystified with more rigor, eventually creating our own case study of a fallen angle or outdated industry. We would do a few more case studies of this nature and that would conclude our year except for a brief study of business and individual taxation policy.

4th Year classes would be:

The entire fourth year would be spent reading 10-Ks, 10-Qs, 13-Fs, 8-Ks and other filings. We would stay within our circle of competence, slowly expanding, as all knowledge is cumulative. We would conduct our own analysis and put together our own investment portfolio. We would judge others investment processes, as the classes would not last long enough to truly judge performance.

The days that we are not watching a pitch we would be talking in a group about how to spot durable competitive advantages and what kinds of competitive advantages there are. Durable meaning an ability to keep current market share or continually expand in the future. We would talk about the qualitative side of the business including management, the brand and the culture of the business.

This would be a weekly assignment for the entire year, no quizzes or finals. We would look at bonds, spin-offs, mergers and acquisitions, convertibles, other special situations and any other security within our circle of competence offering an attractive return.

Also during the final year, studies in the history of commerce and money from 1600 till present day would also be required reading. The Ascent of Money would be the first book (or 4 hour documentary) that we would read followed by other books authored by Niall Ferguson. That would conclude your studies at the BMBS and we would recommend a continual attitude toward life long learning and as a bonus would recommend reading philosophy as well as business biographies.

“Live as if you were to die tomorrow. Learn as if you were to live forever.”

Most of the topics have links attached as well that are definitely worth watching and reading multiple times as well as printing. I’m glad you enjoyed the article, now if only we can convince business schools to pick up the curriculum and scrap CAPM haha.

Consider adding the various Warren E. Buffett articles in Fortune especially "How inflation swindles the equity investor" and his writings in other periodicals particularly "How to tame [Reforming] the casino society"

Terrific article. One of the best I have read here recently. I think your class may also benefit by reading a 10-K, which I know you mentioned, but there are few books that take you straight through. Perosnally, I love Thorton O'Glove and Howard Schilit. They are definitely recommended reading. However, if there is a book that takes you through an annual report and 10-K that give you a better behind the scenes understanding, I would appreciate it you could mention one or two. Thanks! I've been thinking of picking up the book by Fridson, but I am not sure if it fits the bill.

One more thing, a book on evaluating banks, specifically small community banks would be great too. Any advice there?

Sorry for all the questions, but I really enjoyed your article and all of the links. I am familiar with many of the books and some of the links, but I will certainly check them out in more detail

I have updated the article with "How inflation swindles the equity investor" it should definitely be on the list. Thanks for the video link VGM, it has been added. There is a great interview with Jason Zweig and Daniel Kahneman as well as Nassim Taleb and Daniel Kahneman that are great as well. Any thing else that I have missed please recommend as I would love to have the resources as complete as possible for others to use.

Howard and Thornton both have articulate books that cut right through to the important metrics in a simplistic manner. I have never came across a book that teaches you to read a 10-k better than actually reading one. "Investing between the lines" has a intangible view at the language used and is an eye opener, or was at least for me. The best resources (outside of ones already listed) I know for banks, specifically small community banks, in a very simplified manner, would be Khan Acedamy.

I really admire what you're trying to do with this. Given that Buffett devotes significant time to educational activities - and as you point out has told us what he would teach - have you considered the possibility of sending him your final document (or summary format) and asking for his feedback or comments or guidance? Worst case he says no. But the upside would be huge if he responded.

PS Here's the link to Geithner's book on the crisis which Buffett praised:

I have been meaning to write him a hand written letter (I heard he reads them) thanking him for everything he has done for me (and all value investors). I also wanted to ask to have my personal copy of Intelligent Investor or Security Analysis hand signed. I like your idea VGM as you miss 100% of the shots you do not take. Anyway, I hope everyone has enjoyed the post and look forward to further recommendations to add.

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